Local News

CEBA loan program expanded to sole proprietors

May 19, 2020


The government today announced an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) to include many owner-operated small businesses. The program will now be available to a greater number of businesses that are sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.

How CEBA Works

A government-guaranteed loan to a maximum of $40,000 to help eligible businesses with operating costs, with the following terms:

  • The loan is interest-free, and 25% (i.e., $10,000) of the loan is eligible for loan forgiveness if 75% (i.e., $30,000) has been fully repaid on or before December 31, 2022. It also has no principal repayments during this period;
  • If the loan is not repaid by December 31, 2022, it can be converted into a 3-year term loan and will be charged an interest rate of 5%, payable monthly. It will still not incur any principal payment requirements until December 31, 2025; and
  • Guaranteed by the Government of Canada.


  • A business can only apply for the CEBA at one financial institution, and that must be its primary financial institution:
    • The primary financial institution is where the business holds its everyday business banking account; and
    • Attempting to apply at more than one financial institution may result in legal consequences.
  • Receipt of a loan through the CEBA does not preclude the business from participating in other COVID-19 Economic Response Plan programs.
  • Each business, i.e., having a distinct Federal Business Number, can apply for the CEBA:
    • Associated corporations do not share the CEBA.
    • Each business must make a separate application.
  • No credit check will be performed during the approval process

Expenses will be subject to verification and audit by the Government of Canada. Funding will be delivered in partnership with financial institutions. More details, including the launch date for applications under the new criteria, will follow in the days to come. I hope you find this information helpful. – Bruce